There are many different real estate terms that are important to learn when it comes to buying or selling a house. An escrow account is one of them.
What Is An Escrow Account?
An escrow account is opened when a buyer puts an offer down on a home. The cheque they write is not going directly to the sellers, it is being put in an account that will be handled by an escrow officer or an attorney.
The Escrow Officer’s Job
An escrow officer will handle:
- Making sure there are no outstanding liens on the property
- Property taxes
- Titling of the property
- Working with lenders
- Transferring of the property
- Dispersing the money
No one can touch the escrow account until the deal has completely closed. It is considered closed once all the required documents are signed and the buyer has officially transferred the title. The escrow officer will also make sure the respected parties get their money.
How Long Does Escrow Take?
A property can be in escrow for a long, or short, period of time. It depends on the terms and conditions that both the buyers and seller’s have agreed too. If there are outstanding liens on the property, it could make the process longer.
Are Escrow Accounts Used In Canada & The U.S.?
An escrow account in the U.S. is almost always required. Each state has different rules regarding if you do not have to open one, and when it is mandatory. There are also certain states that require you to pay interest charges as well, but for most states, there is no charge.
In Canada, you are hiring a real estate lawyer to handle all the transferring of titles, getting the documents signed, paying out the amounts of money, etc. But, you can request an escrow account to be opened, which is mainly more popular for business purposes.